Building on continued momentum of its iPod players, Apple Computer Inc. nearly doubled its net income on record revenue and easily topped Wall Street expectations. But a soft forecast for the coming quarter drove Apple’s shares down more than 3 percent in extended trading Wednesday.
For the second fiscal quarter, Apple said it expects revenue of about $4.3 billion and earnings per share of 38 cents, including an estimated non-cash share-based compensation expense of 4 cents a share.
Analysts were expecting earnings of 48 cents a share on revenue of $4.6 billion, and questioned why the guidance was so conservative.
Apple’s chief financial officer, Peter Oppenheimer, explained during a conference call that despite an “extraordinary response” to the new iMac desktop and MacBook laptop unveiled last week, the company would start shipping the MacBook in February, limiting its impact for the quarter.
Oppenheimer also indicated Apple might experience a continued “pause” in Mac sales, which the company saw in its first quarter due to customer anticipation of new computers in the coming year.
Normal seasonal effects — how sales normally slow following the holidays — were also factored into the outlook, he said.
However, Apple executives were ebullient Wednesday in their comments about the last quarter.
“We are thrilled to report the best quarter in Apple’s history,” said Steve Jobs, Apple’s chief executive. “We are working on more wonderful products for 2006, and I can’t wait to see what our customers think of them.”
For the three months ended Dec. 31, the maker of Macintosh computers and iPods said it earned $565 million, or 65 cents per share, up from $295 million, or 35 cents a share in the year-ago quarter.
Apple revenues soared to $5.75 billion up from $3.49 billion a year ago.
Analysts on average expected earnings of 61 cents per share on sales of $5.47 billion, according to a Thomson Financial poll. The forecast included a non-cash, share-based compensation expense of 3 cents per share.
Apple said it sold 14 million iPods during the holiday quarter — nearly three times as many units as in the same period a year ago. It shipped 1.25 million Mac computers in the quarter, up slightly from 1.05 million units a year ago. The company has been working to cut its inventory ahead of new Mac computer products, including the first Apple machines with Intel chips, released last week.
Apple shares slumped 3.3 percent in late-session activity, down $2.71, after the report was released. Earlier, the stock fell 2.6 percent, or $2.22, to close at $82.49 on the Nasdaq Stock Market, dragged down by investor disappointment from lackluster results at Yahoo Inc. and missed expectations from Intel Corp.
American Technology Research analyst Shaw Wu said the stock was likely just correcting itself.
“Expectations were getting out of hand,” he said. “And it’s good to see Apple trying to reset them.”
The leaner outlook would still mark the second-best revenue quarter in Apple’s history, Wu said.
Apple’s share price more than doubled last year as it released one new product after another, bringing its fiscal 2005 revenue to an all-time high of nearly $14 billion.
Many analysts expect the Cupertino, Calif.-based company to continue its momentum in 2006 with more Intel-based Macs, content partnerships and new iPod models. Some also envision that Apple will expand further into the consumer electronics space.
But some observers also cite risks in Apple’s outlook. Any delays or hiccups in its transition to Intel chips could hamper computer sales. Also, while the company’s proprietary model has so far worked in its favor with its iPod and iTunes franchises, some analysts wonder whether Apple can sustain that approach in the face of growing competition.